AI is redefining the limits of business optimization and a debate about the ethics of AI pricing has erupted. Recent controversy surrounding Delta Airlines CEO’s suggestion of “personalized price” has triggered public outrage. This opens up a crucial industry-wide discussion: How should AI be used to price products and where should we draw the lines?
Personalized pricing—where different people are charged different prices for the same product or service based on personal data—is more than controversial. It’s exploitative.
Why This Moment Matters
The public’s perception of the world is changing. You can find out more about it here. AI-powered pricing is suspect because some methods cross ethical boundaries or are misunderstood. This would be a huge mistake, and a missed chance.
AI pricing is not limited to personalized pricing based on data points. We must distinguish between exploitative pricing and market-driven dynamic price before we discredit the entire category.
AI has the ability to make pricing better, more fair and more adaptive. But only if you know how it’s used.
The Ethical line: Market-based pricing vs Personalized Pricing
Personalized pricing may seem innovative, but it can be dangerous. By using personal data—like customer profiles, demographics, or income proxies—AI systems can charge people different amounts for the same service based solely on You can also find out more about the people behind this website. They are. This can undermine trust, undermine fairness, introduce bias, and is difficult to detect let alone correct.
It treats the individual like a target to be extracted, and not as a participant in an honest transaction.
But AI does not have to function in this way.
There is an alternative: pricing that reflects the changing market conditions and not individual identity.
You can find the nearest Causal AI The newest member of the family is here.
Learn from Demand: Enter Causal AI
Causal AI is a new type of machine learning which focuses on causality, not just correlations. Cause and effect. When it comes to pricing, this is about understanding how different pricing strategies affect the level of demand on the market.
Ask instead What is the likely amount of money that this individual will pay? Asks for dynamic AI pricing What’s the value of this room? This is similar to the way the market determines gold’s price. The price will be determined by what the market pays at that moment.
This shift is profoundly powerful because it 1) enables Dynamic pricing This system adjusts itself in real time according to current demand. It does not use Sensitive personal dataFocusing instead on observable patterns within aggregated behavior. And 3) It’s ExplainableUnlike simple “what” models, causal models also reveal the “why”.
It is important to note that causal AI can help you create pricing strategies that not only work, but are also effective. Ethics and accountability.
Transparent Pricing Builds Trust—and Performs Better
The benefits of Causal AI go beyond avoiding the traps of personalization. It has tangible benefits:
- TransparencyBusinesses can explain why and how prices are changing.
- Reduced regulatory risksBy avoiding personal data, you can avoid many privacy and fairness issues that are emerging.
- Better long-term outcomes: When customers trust the pricing process, they’re more likely to return—and recommend.
Dynamic trust doesn’t necessarily mean dynamic pricing. By using causal inference, companies can intelligently adapt to real-world situations without alienating their clients.
A Call to Industry
Our industry has a unique opportunity to re-set itself, spurred on by public concerns. We should reject opaque personalization methods in favor of those that are aligned with fairness and transparency. We should embrace AI as a learning tool, not as a black-box that predicts willingness to spend. How markets react to priceYou must act in accordance with this.
We will not make this distinction if we do not now.We risk AI pricing being misunderstood by consumers, journalists and policy makers alike. It would be a disservice done to the true innovation taking place in this field; innovation which can improve outcomes both for customers and businesses alike. Without compromising ethics.
Start by asking yourself this question, whether you are a hotelier or an airline. Do I learn from the demand? Am I profiling my customers?
Now more than ever, the difference is important.
TakeUp ensures pricing is fair for both sides—maximizing what your property is worth in the market while aligning with what markets are willing to pay at any given moment. Visit takeup.ai Learn more.
TakeUp is an AI-powered revenue optimization platform built for independent hospitality properties, including boutique hotels, inns, bed & breakfasts, and glamping retreats. TakeUp uses AI-driven insights to help properties save time while maximizing revenue. It also integrates seamlessly with leading property management software systems, driving profitability and operational efficiency. Visit takeup.ai for more information.
Kelly Campbell
Marketing Director
TakeUp
